Exhibit 99.1
Equinix Reports Second Quarter 2005 Results
FOSTER CITY, Calif.--(BUSINESS WIRE)--July 27, 2005--Equinix, Inc.
(Nasdaq:EQIX):
-- Increased revenues by 33% over same quarter 2004
-- Increased EBITDA to $16.1 million, up from $7.5 million in
same quarter 2004
-- Continues expansion efforts with acquisitions of centers in
Silicon Valley and recently announced Chicago center
-- Added 70 customers including D.E. Shaw, Fox Sports Interactive
Media, Merrill Lynch Asia Pacific Ltd, NASA and Salesforce.com
Equinix, Inc. (Nasdaq:EQIX), the leading provider of
network-neutral data centers and Internet exchange services, today
reported its quarterly results for the period ended June 30, 2005.
Revenues were $52.5 million for the second quarter, a 33% increase
over the same quarter last year and an 8% increase over the previous
quarter. Recurring revenues, consisting of colocation, interconnection
and managed services, were $49.4 million, a 33% increase over the same
quarter last year and an 8% increase over the previous quarter.
Non-recurring revenues, consisting primarily of professional services
and installation fees, were $3.1 million for the quarter, as compared
to $2.1 million in the same quarter last year and $2.8 million the
previous quarter.
Cost of revenues were $38.8 million for the second quarter, a 14%
increase over the same quarter last year and a 5% increase over the
previous quarter. Cost of revenues, excluding depreciation,
amortization, accretion and stock-based compensation of $15.5 million,
were $23.3 million for the second quarter, a 13% increase over same
quarter last year and a 6% increase over the previous quarter. Cash
gross margins, defined as gross profit less depreciation,
amortization, accretion and stock-based compensation, divided by
revenues, for the quarter were 56%, up from 48% the same quarter last
year and 55% the previous quarter.
Selling, general and administrative expenses, including
stock-based compensation of $2.5 million, were $16.2 million for the
second quarter, a 30% increase over the same quarter last year and a
6% increase over the previous quarter. Selling, general and
administrative expenses, excluding depreciation, amortization and
stock-based compensation of $3.1 million, were $13.1 million for the
second quarter, a 16% increase over same quarter last year and a 6%
increase over the previous quarter.
Net loss for the second quarter, including stock-based
compensation expense of $2.5 million, was $3.4 million. This
represents a basic and diluted net loss per share of $0.14 based on a
weighted average share count of 23.7 million or a pro forma net loss
per share of $0.04 excluding the stock-based compensation expense. The
Company's cash net income, defined as net income (loss) less
depreciation, amortization, accretion, stock-based compensation
expense, restructuring charges and non-cash interest expense for the
quarter was $15.4 million, a 19% improvement over the previous
quarter.
EBITDA, defined as loss from operations less depreciation,
amortization, accretion, stock-based compensation expense and
restructuring charges, for the second quarter was $16.1 million, up
12% over the previous quarter and up from $7.5 million the same
quarter 2004.
Capital expenditures in the quarter were $9.9 million, of which
$5.4 million was attributed to ongoing capital expenditures and $4.5
million was attributed to expansion capital expenditures.
The company generated cash from operating activities of $18.1
million, a $2.8 million or 18% increase over the previous quarter.
Cash used in investing activities was $6.7 million, an increase of
$0.6 million over the previous quarter. As a result, the company
generated $11.4 million in free cash flow, a $2.2 million increase
over the previous quarter. Free cash flow is defined as net cash
generated from operating activities less net cash used in investing
activities (excluding the purchases, sales and maturities of
short-term and long-term investments).
As of June 30, 2005, the company's cash, cash equivalents and
investments were $132.0 million, an increase of $13.9 million over the
previous quarter.
"Equinix delivered strong results in the second quarter
contributing to a solid first half for the company," said Peter Van
Camp, CEO of Equinix. "Significant in this was the level of our
bookings and the quality of our new customers. This was a new high for
the company, setting up a second half of continued strong growth."
Other Company Metrics & Developments
-- On a same IBX basis (defined as IBX centers which have been
available for new customer installs for at least four full
quarters), revenue was $51.3 million; cost of revenues were
$35.6 million; cost of revenues, excluding depreciation,
amortization, accretion and stock-based compensation, were
$21.4 million and cash gross margins for the quarter were 58%.
EBITDA on a same IBX basis was $17.0 million.
-- Equinix added 70 new customers in the quarter including AON
Warranty Group, Coral Wireless, D.E. Shaw, eHarmony.com, Fox
Sports Interactive Media, Ikea Asia Pacific Pte Ltd, Merrill
Lynch Asia Pacific Ltd, MySpace.com, NASA, Salesforce.com,
Samsung Networks and Sandisk.
-- Based on a total cabinet capacity of approximately 26,100, the
number of cabinets billing at the end of the quarter was
approximately 12,400, or 47%, up from approximately 11,700 the
previous quarter. On a weighted average basis, the number of
cabinets billing was approximately 12,100, which represents
46%.
-- U.S. interconnection revenues were 22% of U.S. recurring
revenues for the quarter. Interconnection services represent
20% of total worldwide recurring revenues.
Business Outlook
For the third quarter 2005, the company expects revenues to be in
the range of $55.5 to $56.5 million. Cash gross margins are expected
to be approximately 56%. Cash selling, general and administrative
expenses are expected to be in the range of $13.0 to $14.0 million.
EBITDA is expected to be between $17.0 and $18.0 million as the
company continues to invest in growing the business. Net loss is
expected to be in the range of $2.0 to $3.0 million. This includes
approximately $1.8 million of stock-based compensation expense
primarily attributed to the restricted stock grants, based on recent
stock trading levels of approximately $45.00 per share, and
approximately $1.9 million of interest expense. The weighted average
shares outstanding will be approximately 24.0 million. Capital
expenditures are estimated to be in the range of $8.0 to $10.0
million, including approximately $5.0 million in capital required for
improvements to the newly acquired Silicon Valley and Chicago IBX
centers.
For the full year of 2005, revenues are expected to be in the
range of $216.0 to $219.0 million. Cash gross margins are expected to
be in the range of 55-56%. Cash selling, general and administrative
expenses are expected to be approximately $53.0 million. EBITDA is
expected to be between $66.0 and $68.0 million. Net loss is expected
to be in the range of $13.0 to $15.0 million. This includes
approximately $8.5 million of stock-based compensation expense
primarily attributed to the restricted stock grants, based on recent
stock trading levels of approximately $45.00 per share, and $9.0
million of interest expense. The weighted average shares outstanding
will be approximately 23.5 million. Capital expenditures for 2005 are
expected to be in a range of $40.0 to $45.0 million, comprised of
$17.0 to $18.0 million of ongoing capital expenditures and $23.0 to
$27.0 million of expansion capital expenditures.
The company will discuss its results and guidance on its quarterly
conference call on Wednesday, July 27, 2005, at 5:30 p.m. ET (2:30
p.m. PT). To hear the conference call, please dial 1-773-799-3263
(domestic and international) and reference the passcode (EQIX). A
simultaneous live Webcast of the call will be available over the
Internet at www.equinix.com, under the Investor Relations heading. A
replay of the call will be available beginning on Wednesday, July 27,
2005 at 7:30 p.m. (ET) by dialing 203-369-1928. In addition, the
Webcast will be available for replay on the company's Web site at
www.equinix.com. No password is required for either method of replay.
A reconciliation between GAAP information and non-GAAP information
contained in this press release is provided in a table immediately
following the Condensed Consolidated Statements of Operations - GAAP
Presentation. This reconciliation is also available at www.equinix.com
under the Investor Relations heading.
About Equinix
Equinix is the leading global provider of network-neutral data
centers and Internet exchange services for enterprises, content
companies, systems integrators and network services providers. Through
the company's 15 Internet Business Exchange(TM) (IBX(R)) centers in
five countries, customers can directly interconnect with every major
global network and ISP for their critical peering, transit and traffic
exchange requirements. These interconnection points facilitate the
highest performance and growth of the Internet by serving as neutral
and open marketplaces for Internet infrastructure services, allowing
customers to expand their businesses while reducing costs.
This press release contains forward-looking statements that
involve risks and uncertainties. Actual results may differ materially
from expectations discussed in such forward-looking statements.
Factors that might cause such differences include, but are not limited
to, the challenges of operating IBX centers and developing, deploying
and delivering Equinix services; a failure to receive significant
revenue from customers in recently-acquired data centers; competition
from existing and new competitors; the ability to generate sufficient
cash flow or otherwise obtain funds to repay outstanding indebtedness;
the loss or decline in business from our key customers and other risks
described from time to time in Equinix's filings with the Securities
and Exchange Commission. In particular, see Equinix's recent quarterly
and annual reports filed with the Securities and Exchange Commission,
copies of which are available upon request from Equinix. Equinix does
not assume any obligation to update the forward-looking information
contained in this press release.
Equinix and IBX are registered trademarks of Equinix, Inc.
Internet Business Exchange is a trademark of Equinix, Inc.
Non-GAAP Financial Measures
Equinix continues to provide all information required in
accordance with generally accepted accounting principles (GAAP), but
it believes that evaluating its ongoing operating results may be
difficult if limited to reviewing only GAAP financial measures.
Accordingly, Equinix uses non-GAAP financial measures, such as EBITDA,
cash cost of revenues, cash gross margins, cash operating expenses
(also known as cash selling, general and administrative expenses or
cash SG&A), cash interest expense and cash net income (loss) and free
cash flow to evaluate its operations. In presenting these non-GAAP
financial measures, Equinix excludes certain non-cash or non-recurring
items that it believes are not good indicators of the company's
current or future operating performance. These non-cash or
non-recurring items are depreciation, amortization, accretion,
stock-based compensation, non-cash interest, and, with respect to 2004
results, the non-cash portion of loss on debt extinguishment and
conversion and restructuring charges (there were no such charges or
losses in 2005). Recent legislative and regulatory changes encourage
use of and emphasis on GAAP financial metrics and require companies to
explain why non-GAAP financial metrics are relevant to management and
investors. Equinix excludes these non-cash or non-recurring items in
order for Equinix's lenders, investors, and industry analysts who
review and report on the company, to better evaluate the company's
operating performance and cash spending levels relative to its
industry sector and competitor base.
Equinix excludes depreciation expense as these charges primarily
relate to the initial construction costs of our IBX centers and do not
reflect our current or future cash spending levels to support our
business. Our IBX centers are long-lived assets, and have an economic
life greater than ten years. The construction costs of our IBX centers
do not recur and future capital expenditures remain minor relative to
our initial investment. This is a trend we expect to continue. In
addition, depreciation is also based on the estimated useful lives of
our IBX centers. These estimates could vary from actual performance of
the asset, are based on historic costs incurred to build out our IBX
centers, and are not indicative of current or expected future capital
expenditures. Therefore, Equinix excludes depreciation from its
operating results when evaluating its operations.
In addition, in presenting the non-GAAP financial measures,
Equinix excludes amortization expense related to certain intangible
assets, as it represents a non-cash cost that may not recur and is not
a good indicator of the company's current or future operating
performance. Equinix excludes accretion expense, both as it relates to
its asset retirement obligations as well as its accrued restructuring
charge liability, as these expenses represent costs, which Equinix
believes are not meaningful in evaluating the Company's current
operations. Equinix excludes non-cash stock-based compensation expense
as it represents expense attributed to stock awards that have no
current or future cash obligations. As such, we, and our investors and
analysts, exclude this stock-based compensation expense when assessing
the cash generating performance of our operations. Equinix excludes
interest expense associated with the amortization of debt issuance
costs and discounts, as well as the interest expense associated with
its convertible secured notes as such interest expenses do not require
any cash in the periods presented nor will they in future periods.
Lastly, with respect to its 2004 results, Equinix excludes
restructuring charges and the non-cash portion of the loss on debt
extinguishment and conversion. The restructuring charges relate to the
company's decision to exit leases for excess space adjacent to several
of our IBX centers, which we do not intend to build out now or in the
future. The non-cash portion of the loss on debt extinguishment and
conversion, which represents the write-off of the unamortized debt
issuance costs and discounts associated with the debt facilities
extinguished or converted as no cash was expended in the periods
presented for such write-offs nor will there be in the future.
Management believes such restructuring charges and write-offs of debt
issuance costs and discounts were unique costs that are not expected
to recur, and consequently, does not consider these charges as a
normal component of expenses related to current and ongoing
operations.
Our management does not itself, nor does it suggest that investors
should, consider such non-GAAP financial measures in isolation from,
or as a substitute for, financial information prepared in accordance
with GAAP. However, we have presented such non-GAAP financial measures
to provide investors with an additional tool to evaluate our operating
results in a manner that focuses on what management believes to be our
ongoing business operations. Management believes that the inclusion of
these non-GAAP financial measures provide consistency and
comparability with past reports and provide a better understanding of
the overall performance of the business and its ability to perform in
subsequent periods. Equinix believes that if it did not provide such
non-GAAP financial information, investors would not have all the
necessary data to analyze Equinix effectively.
Investors should note, however, that the non-GAAP financial
measures used by Equinix may not be the same non-GAAP financial
measures, and may not be calculated in the same manner, as that of
other companies. In addition, whenever Equinix uses such non-GAAP
financial measures, it provides a reconciliation of non-GAAP financial
measures to the most closely applicable GAAP financial measure.
Investors are encouraged to review the related GAAP financial measures
and the reconciliation of these non-GAAP financial measures to their
most directly comparable GAAP financial measure.
Equinix intends to calculate the various non-GAAP financial
measures in future periods consistent with how it was calculated for
the three and six months ended June 30, 2005 and 2004, presented
within this press release.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP PRESENTATION
(in thousands, except per share detail)
Three Months Ended Six Months Ended
------------------------------ ------------------
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
-------- --------- ----------- -------- ---------
(unaudited)
Recurring
revenues $49,431 $45,901 $37,271 $95,332 $71,754
Non-recurring
revenues 3,048 2,783 2,152 5,831 4,489
-------- --------- ----------- -------- ---------
Revenues 52,479 48,684 39,423 101,163 76,243
Cost of
revenues 38,811 36,873 34,150 75,684 67,935
-------- --------- ----------- -------- ---------
Gross profit 13,668 11,811 5,273 25,479 8,308
-------- --------- ----------- -------- ---------
Operating
expenses:
Sales and
marketing 5,145 4,819 4,423 9,964 9,065
General and
administrative 11,027 10,489 8,008 21,516 16,250
-------- --------- ----------- -------- ---------
Total operating
expenses 16,172 15,308 12,431 31,480 25,315
-------- --------- ----------- -------- ---------
Loss from
operations (2,504) (3,497) (7,158) (6,001) (17,007)
-------- --------- ----------- -------- ---------
Interest and other
income (expense):
Interest income 902 667 242 1,569 484
Interest expense
and other (1,945) (2,459) (2,283) (4,404) (6,413)
Loss on debt
extinguishment
and conversion - - - - (16,211)
-------- --------- ----------- -------- ---------
Total interest
and other, net (1,043) (1,792) (2,041) (2,835) (22,140)
-------- --------- ----------- -------- ---------
Net loss before
income taxes (3,547) (5,289) (9,199) (8,836) (39,147)
Income
taxes 116 (505) (6) (389) (200)
-------- --------- ----------- -------- ---------
Net
loss $(3,431) $(5,794) $(9,205) $(9,225) $(39,347)
======== ========= =========== ======== =========
Basic and diluted
net loss per share $(0.14) $(0.26) $(0.51) $(0.40) $(2.33)
======== ========= =========== ======== =========
Shares used in
computing basic and
diluted net loss
per share 23,727 21,898 18,191 22,964 16,862
======== ========= =========== ======== =========
Pro forma basic and
diluted net loss
per share (1) $(0.04) $(0.15) $(0.50) $(0.19) $(1.32)
======== ========= =========== ======== =========
Shares used in
computing pro
forma basic and
diluted net
loss per share 23,727 21,898 18,191 22,964 16,862
======== ========= =========== ======== =========
- --------------------
(1) Pro forma basic and diluted net loss per share excludes the
$16,211,000 loss on debt extinguishment and conversion during the
six months ended June 30, 2004 and stock-based compensation
expense for all periods presented as follows:
Cost of
revenues $- $- $2 $- $22
Sales and
marketing 454 447 15 901 45
General and
administrative 2,035 1,997 166 4,032 793
-------- --------- ----------- -------- ---------
Stock-based
compensation $2,489 $2,444 $183 $4,933 $860
======== ========= =========== ======== =========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
NON-GAAP PRESENTATION
(in thousands)
Three Months Ended
-------------------------------
June 30, March 31, June 30,
2005 2005 2004
-------- ---------- -----------
(unaudited)
Recurring revenues $49,431 $45,901 $37,271
Non-recurring revenues 3,048 2,783 2,152
-------- ---------- -----------
Revenues (1) 52,479 48,684 39,423
Cash cost of revenues (2) 23,317 21,929 20,631
-------- ---------- -----------
Cash gross profit (3) 29,162 26,755 18,792
-------- ---------- -----------
Cash operating expenses (4):
Cash sales and marketing
expenses(5) 4,676 4,357 3,933
Cash general and administrative
expenses (6) 8,431 8,061 7,331
-------- ---------- -----------
Total cash operating
expenses (7) 13,107 12,418 11,264
-------- ---------- -----------
EBITDA (8) 16,055 14,337 7,528
-------- ---------- -----------
Cash interest and other income
(expense) (9):
Interest income 902 667 242
Cash interest expense and other
(10) (1,677) (1,554) (547)
Cash loss on debt extinguishment
and conversion (11) - - -
Income taxes 116 (505) (6)
-------- ---------- -----------
Total cash interest and
other, net (659) (1,392) (311)
-------- ---------- -----------
Cash net income (12) $15,396 $12,945 $7,217
======== ========== ===========
Cash gross margins (13) 56% 55% 48%
======== ========== ===========
EBITDA flow-through rate (14) 45% 53% 72%
======== ========== ===========
- --------------------------------------
(1) The geographic split of our revenues is
presented below:
U.S. revenues $45,384 $42,016 $34,093
Asia-Pacific revenues 7,095 6,668 5,330
-------- ---------- -----------
Revenues $52,479 $48,684 $39,423
======== ========== ===========
Revenues on a services basis is
presented below:
Colocation $36,105 $33,236 $27,205
Interconnection 9,845 9,324 7,383
Managed infrastructure 3,481 3,341 2,683
-------- ---------- -----------
Recurring revenues 49,431 45,901 37,271
Non-recurring revenues 3,048 2,783 2,152
-------- ---------- -----------
Revenues $52,479 $48,684 $39,423
======== ========== ===========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. Revenues
on a same IBX versus new IBX basis is presented below:
Same IBX centers $51,282 $48,457 $37,996
New IBX centers 1,197 227 1,427
-------- ---------- -----------
Revenues $52,479 $48,684 $39,423
======== ========== ===========
(2) We define cash cost of revenues as cost of revenues less
depreciation, amortization, accretion and stock-based
compensation as presented below:
Cost of revenues $38,811 $36,873 $34,150
Depreciation, amortization and
accretion expense (15,494) (14,944) (13,517)
Stock-based compensation expense - - (2)
-------- ---------- -----------
Cash cost of revenues $23,317 $21,929 $20,631
======== ========== ===========
The geographic split of our cash cost of revenues is
presented below:
U.S. cash cost of revenues $19,339 $18,061 $16,824
Asia-Pacific cash cost of
revenues 3,978 3,868 3,807
-------- ---------- -----------
Cash cost of revenues $23,317 $21,929 $20,631
======== ========== ===========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. Cost of
revenues and cash cost of revenues on a same IBX versus new IBX
basis is presented below:
Same IBX centers-cash cost of
revenues $21,390 $21,091 $18,821
Same IBX centers-depreciation,
amortization and accretion
expense 14,183 14,196 13,263
Same IBX centers-stock-based
compensation expense - - 2
-------- ---------- -----------
Same IBX centers cost of
revenues 35,573 35,287 32,086
-------- ---------- -----------
New IBX centers-cash cost of
revenues 1,927 838 1,810
New IBX centers-depreciation,
amortization and accretion
expense 1,311 748 254
New IBX centers-stock-based
compensation expense - - -
-------- ---------- -----------
New IBX centers cost of
revenues 3,238 1,586 2,064
-------- ---------- -----------
Cost of revenues $38,811 $36,873 $34,150
======== ========== ===========
(3) We define cash gross profit as revenues less cash cost of
revenues (as defined above).
(4) We define cash operating expenses as operating
expenses less depreciation, amortization and stock-based
compensation. We also refer to cash operating expenses
as cash selling, general and administrative expenses or
"cash SG&A".
(5) We define cash sales and marketing expenses as sales and
marketing expenses less depreciation, amortization
and stock-based compensation as presented below:
Sales and marketing expenses $5,145 $4,819 $4,423
Depreciation and amortization
expense (15) (15) (475)
Stock-based compensation expense (454) (447) (15)
-------- ---------- -----------
Cash sales and marketing
expenses $4,676 $4,357 $3,933
======== ========== ===========
(6) We define cash general and administrative expenses as general and
administrative expenses less depreciation, amortization
and stock-based compensation as presented below:
General and administrative
expenses $11,027 $10,489 $8,008
Depreciation and amortization
expense (561) (431) (511)
Stock-based compensation expense (2,035) (1,997) (166)
-------- ---------- -----------
Cash general and
administrative expenses $8,431 $8,061 $7,331
======== ========== ===========
(7) Our cash operating expenses, or cash SG&A, as defined above, is
presented below:
Cash sales and marketing expenses $4,676 $4,357 $3,933
Cash general and administrative
expenses 8,431 8,061 7,331
-------- ---------- -----------
$13,107 $12,418 $11,264
======== ========== ===========
The geographic split of our cash operating expenses, or cash
SG&A, is presented below:
U.S. cash SG&A $10,486 $9,908 $8,911
Asia-Pacific cash SG&A 2,621 2,510 2,353
-------- ---------- -----------
Cash SG&A $13,107 $12,418 $11,264
======== ========== ===========
(8) We define EBITDA as loss from operations less depreciation,
amortization, accretion, stock-based compensation expense
and restructuring charges as presented below:
Loss from operations $(2,504) $(3,497) $(7,158)
Depreciation, amortization and
accretion expense 16,070 15,390 14,503
Stock-based compensation expense 2,489 2,444 183
Restructuring charges - - -
-------- ---------- -----------
EBITDA $16,055 $14,337 $7,528
======== ========== ===========
The geographic split of our EBITDA is presented
below:
U.S. loss from operations $(1,871) $(2,614) $(4,800)
U.S. depreciation, amortization
and accretion expense 14,941 14,217 12,975
U.S. stock-based compensation
expense 2,489 2,444 183
U.S. restructuring charges - - -
-------- ---------- -----------
U.S. EBITDA 15,559 14,047 8,358
-------- ---------- -----------
Asia-Pacific loss from operations (633) (883) (2,358)
Asia-Pacific depreciation,
amortization and accretion
expense 1,129 1,173 1,528
Asia-Pacific stock-based
compensation expense - - -
Asia-Pacific restructuring
charges - - -
-------- ---------- -----------
Asia-Pacific EBITDA 496 290 (830)
-------- ---------- -----------
EBITDA $16,055 $14,337 $7,528
======== ========== ===========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. EBITDA
on a same IBX versus new IBX basis is presented below:
Same IBX centers-loss from
operations $(232) $(1,955) $(6,479)
Same IBX centers-depreciation,
amortization and accretion
expense 14,759 14,642 14,249
Same IBX centers-stock-based
compensation expense 2,489 2,444 183
Same IBX centers-restructuring
charges - - -
-------- ---------- -----------
Same IBX center EBITDA 17,016 15,131 7,953
-------- ---------- -----------
New IBX centers-loss from
operations (2,272) (1,542) (679)
New IBX centers-depreciation,
amortization and accretion
expense 1,311 748 254
New IBX centers-stock-based
compensation expense - - -
New IBX centers-restructuring
charges - - -
-------- ---------- -----------
New IBX center EBITDA (961) (794) (425)
-------- ---------- -----------
EBITDA $16,055 $14,337 $7,528
======== ========== ===========
(9) We define cash interest and other income (expense) as interest
expense plus income taxes less interest income,
non-cash interest expense and non-cash loss on debt
extinguishment and conversion. Non-cash interest expense is
comprised of amortization of debt discounts and debt issuance
costs and non-cash interest on our convertible secured notes.
Non-cash loss on debt extinguishment and conversion is comprised
of the non-cash write-off of debt issuance costs and discounts.
(10) Cash interest expense and other is defined as interest expense
less amortization of debt discounts and debt issuance
costs and non-cash interest on our convertible secured notes as
presented below:
Interest expense and other $(1,945) $(2,459) $(2,283)
Amortization of debt discounts
and debt issuance costs 198 198 505
Non-cash interest on convertible
secured notes 70 707 1,231
-------- ---------- -----------
Non-cash interest expense 268 905 1,736
-------- ---------- -----------
Cash interest expense and
other $(1,677) $(1,554) $(547)
======== ========== ===========
(11) Loss on debt extinguishment and
conversion $- $- $-
Non-cash write-off of debt
issuance costs and discounts - - -
-------- ---------- -----------
Non-cash loss on debt
extinguishment and
conversion - - -
-------- ---------- -----------
Cash loss on debt
extinguishment and
conversion $- $- $-
======== ========== ===========
(12) We define cash net income as net income (loss) less depreciation,
amortization, accretion, stock-based compensation
expense, restructuring charges, non-cash interest expense and
non-cash loss on debt extinguishment and conversion as
presented below:
Net income (loss) $(3,431) $(5,794) $(9,205)
Depreciation, amortization and
accretion expense 16,070 15,390 14,503
Stock-based compensation expense 2,489 2,444 183
Restructuring charges - - -
Non-cash interest expense
(defined above) 268 905 1,736
Non-cash loss on debt
extinguishment and conversion
(defined above) - - -
-------- ---------- -----------
Cash net income $15,396 $12,945 $7,217
======== ========== ===========
(13) We define cash gross margins as cash gross profit
divided by revenues.
Our cash gross margins by geographic region
is presented below:
U.S. cash gross margins 57% 57% 51%
======== ========== ===========
Asia-Pacific cash gross margins 44% 42% 29%
======== ========== ===========
Same IBX centers are IBX centers which have been available for
customer installs for at least four full quarters. Our cash
gross margins for same IBX centers is presented below:
Same IBX cash gross margins 58% 56% 50%
======== ========== ===========
(14) We define EBITDA flow-through rate as incremental EBITDA growth
divided by incremental revenue growth as follows:
EBITDA - current period $16,055 $14,337 $7,528
Less EBITDA - prior period (14,337) (12,363) (5,657)
-------- ---------- -----------
EBITDA growth $1,718 $1,974 $1,871
======== ========== ===========
Revenues - current period $52,479 $48,684 $39,423
Less revenues - prior period (48,684) (44,989) (36,820)
-------- ---------- -----------
Revenue growth $3,795 $3,695 $2,603
======== ========== ===========
EBITDA flow-through rate 45% 53% 72%
======== ========== ===========
Same IBX centers are IBX centers which have been available for
customer installs for at least four full quarters. Our EBITDA
flow-through rates for same IBX centers is presented below:
Same IBX EBITDA - current period $17,016 $15,131 $7,953
Less same IBX EBITDA - prior period (15,131) (12,822) (6,434)
-------- ---------- ----------
Same IBX EBITDA growth $1,885 $2,309 $1,519
======== ========== ==========
Same IBX revenues - current period $51,282 $48,457 $37,996
Less same IBX revenues -
prior period (48,457) (43,165) (35,737)
------- -------- --------
Same IBX revenue growth $2,825 $5,292 $2,259
======== ========= ========
Same IBX EBITDA flow-through rate 67% 44% 67%
======== ======== ========
Six Months Ended
----------------------
June 30, June 30,
2005 2004
---------- -----------
(unaudited)
Recurring revenues $95,332 $71,754
Non-recurring revenues 5,831 4,489
---------- -----------
Revenues (1) 101,163 76,243
Cash cost of revenues (2) 45,246 40,851
---------- -----------
Cash gross profit (3) 55,917 35,392
---------- -----------
Cash operating expenses (4):
Cash sales and marketing expenses(5) 9,033 8,071
Cash general and administrative expenses
(6) 16,492 14,136
---------- -----------
Total cash operating expenses
(7) 25,525 22,207
---------- -----------
EBITDA (8) 30,392 13,185
---------- -----------
Cash interest and other income (expense) (9):
Interest income 1,569 484
Cash interest expense and other (10) (3,231) (2,062)
Cash loss on debt extinguishment and
conversion (11) - (2,505)
Income taxes (389) (200)
---------- -----------
Total cash interest and other, net (2,051) (4,283)
---------- -----------
Cash net income (12) $28,341 $8,902
========== ===========
Cash gross margins (13) 55% 46%
========== ===========
EBITDA flow-through rate (14) 58% 72%
========== ===========
- -----------------------------------------------
(1) The geographic split of our revenues is
presented below:
U.S. revenues $87,400 $66,114
Asia-Pacific revenues 13,763 10,129
---------- -----------
Revenues $101,163 $76,243
========== ===========
Revenues on a services basis is presented
below:
Colocation $69,341 $52,011
Interconnection 19,169 14,320
Managed infrastructure 6,822 5,423
---------- -----------
Recurring revenues 95,332 71,754
Non-recurring revenues 5,831 4,489
---------- -----------
Revenues $101,163 $76,243
========== ===========
New IBX centers are IBX centers which have not been
available for customer installs for at least four full quarters.
Revenues on a same IBX versus new IBX basis is presented below:
Same IBX centers $99,739 $73,733
New IBX centers 1,424 2,510
---------- -----------
Revenues $101,163 $76,243
========== ===========
(2) We define cash cost of revenues as cost of revenues less
depreciation, amortization, accretion and stock-based
compensation as presented below:
Cost of revenues $75,684 $67,935
Depreciation, amortization and accretion
expense (30,438) (27,062)
Stock-based compensation expense - (22)
---------- -----------
Cash cost of revenues $45,246 $40,851
========== ===========
The geographic split of our cash cost of
revenues is presented below:
U.S. cash cost of revenues $37,400 $33,555
Asia-Pacific cash cost of revenues 7,846 7,296
---------- -----------
Cash cost of revenues $45,246 $40,851
========== ===========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. Cost of
revenues and cash cost of revenues on a same IBX versus new IBX
basis is presented below:
Same IBX centers-cash cost of revenues $42,481 $37,197
Same IBX centers-depreciation,
amortization and accretion expense 28,379 26,587
Same IBX centers-stock-based compensation
expense - 22
---------- -----------
Same IBX centers cost of revenues 70,860 63,806
---------- -----------
New IBX centers-cash cost of revenues 2,765 3,654
New IBX centers-depreciation, amortization
and accretion expense 2,059 475
New IBX centers-stock-based compensation
expense - -
---------- -----------
New IBX centers cost of revenues 4,824 4,129
---------- -----------
Cost of revenues $75,684 $67,935
========== ===========
(3) We define cash gross profit as revenues less cash
cost of revenues (as defined above).
(4) We define cash operating expenses as operating
expenses less depreciation, amortization and stock-based
compensation. We also refer to cash operating expenses as cash
selling, general and administrative expenses or
"cash SG&A".
(5) We define cash sales and marketing expenses as sales and
marketing expenses less depreciation, amortization
and stock-based compensation as presented below:
Sales and marketing expenses $9,964 $9,065
Depreciation and amortization expense (30) (949)
Stock-based compensation expense (901) (45)
---------- -----------
Cash sales and marketing expenses $9,033 $8,071
========== ===========
(6) We define cash general and administrative expenses as general and
administrative expenses less depreciation, amortization
and stock-based compensation as presented below:
General and administrative expenses $21,516 $16,250
Depreciation and amortization expense (992) (1,321)
Stock-based compensation expense (4,032) (793)
---------- -----------
Cash general and administrative
expenses $16,492 $14,136
========== ===========
(7) Our cash operating expenses, or cash
SG&A, as defined above, is presented
below:
Cash sales and marketing expenses $9,033 $8,071
Cash general and administrative expenses 16,492 14,136
---------- -----------
$25,525 $22,207
========== ===========
The geographic split of our cash operating expenses,
or cash SG&A, is presented below:
U.S. cash SG&A $20,394 $17,531
Asia-Pacific cash SG&A 5,131 4,676
---------- -----------
Cash SG&A $25,525 $22,207
========== ===========
(8) We define EBITDA as loss from operations less depreciation,
amortization, accretion, stock-based compensation expense
and restructuring charges as presented below:
Loss from operations $(6,001) $(17,007)
Depreciation, amortization and accretion
expense 31,460 29,332
Stock-based compensation expense 4,933 860
Restructuring charges - -
---------- -----------
EBITDA $30,392 $13,185
========== ===========
The geographic split of our EBITDA is
presented below:
U.S. loss from operations $(4,485) $(12,202)
U.S. depreciation, amortization and
accretion expense 29,158 26,370
U.S. stock-based compensation expense 4,933 860
U.S. restructuring charges - -
---------- -----------
U.S. EBITDA 29,606 15,028
---------- -----------
Asia-Pacific loss from operations (1,516) (4,805)
Asia-Pacific depreciation, amortization
and accretion expense 2,302 2,962
Asia-Pacific stock-based compensation
expense - -
Asia-Pacific restructuring charges - -
---------- -----------
Asia-Pacific EBITDA 786 (1,843)
---------- -----------
EBITDA $30,392 $13,185
========== ===========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. EBITDA
on a same IBX versus new IBX basis is presented below:
Same IBX centers-loss from operations $(2,187) $(15,330)
Same IBX centers-depreciation,
amortization and accretion expense 29,401 28,857
Same IBX centers-stock-based compensation
expense 4,933 860
Same IBX centers-restructuring charges - -
---------- -----------
Same IBX center EBITDA 32,147 14,387
---------- -----------
New IBX centers-loss from operations (3,814) (1,677)
New IBX centers-depreciation, amortization
and accretion expense 2,059 475
New IBX centers-stock-based compensation
expense - -
New IBX centers-restructuring charges - -
---------- -----------
New IBX center EBITDA (1,755) (1,202)
---------- -----------
EBITDA $30,392 $13,185
========== ===========
(9) We define cash interest and other income (expense)
as interest expense plus income taxes less interest income,
non-cash interest expense and non-cash loss on debt
extinguishment and conversion. Non-cash interest
expense is comprised of amortization of debt discounts
and debt issuance costs and non-cash interest on our
convertible secured notes. Non-cash loss on debt
extinguishment and conversion is comprised of the
non-cash write-off of debt issuance costs and discounts.
(10) Cash interest expense and other is defined as interest
expense less amortization of debt discounts and debt issuance
costs and non-cash interest on our convertible secured
notes as presented below:
Interest expense and other $(4,404) $(6,413)
Amortization of debt discounts and debt
issuance costs 396 1,814
Non-cash interest on convertible secured
notes 777 2,537
---------- -----------
Non-cash interest expense 1,173 4,351
---------- -----------
Cash interest expense and other $(3,231) $(2,062)
========== ===========
(11) Loss on debt extinguishment and conversion $- $(16,211)
Non-cash write-off of debt issuance costs
and discounts - 13,706
---------- -----------
Non-cash loss on debt extinguishment
and conversion - 13,706
---------- -----------
Cash loss on debt extinguishment and
conversion $- $(2,505)
========== ===========
(12) We define cash net income as net income (loss) less
depreciation, amortization, accretion, stock-based compensation
expense, restructuring charges, non-cash interest expense and
non-cash loss on debt extinguishment and conversion as
presented below:
Net income (loss) $(9,225) $(39,347)
Depreciation, amortization and accretion
expense 31,460 29,332
Stock-based compensation expense 4,933 860
Restructuring charges - -
Non-cash interest expense (defined above) 1,173 4,351
Non-cash loss on debt extinguishment and
conversion (defined above) - 13,706
---------- -----------
Cash net income $28,341 $8,902
========== ===========
(13) We define cash gross margins as cash gross
profit divided by revenues.
Our cash gross margins by geographic region
is presented below:
U.S. cash gross margins 57% 49%
========== ===========
Asia-Pacific cash gross margins 43% 28%
========== ===========
Same IBX centers are IBX centers which have been available for
customer installs for at least four full quarters. Our cash
gross margins for same IBX centers is presented below:
Same IBX cash gross margins 57% 50%
========== ===========
(14) We define EBITDA flow-through rate as incremental EBITDA growth
divided by incremental revenue growth as follows:
EBITDA - current period $30,392 $13,185
Less EBITDA - prior period (22,429) (4,483)
---------- -----------
EBITDA growth $7,963 $8,702
========== ===========
Revenues - current period $101,163 $76,243
Less revenues - prior period (87,428) (64,073)
---------- -----------
Revenue growth $13,735 $12,170
========== ===========
EBITDA flow-through rate 58% 72%
========== ===========
Same IBX centers are IBX centers which have been available for
customer installs for at least four full quarters. Our EBITDA
flow-through rates for same IBX centers is presented below:
Same IBX EBITDA - current period $32,147 $14,387
Less same IBX EBITDA - prior period (23,142) (4,707)
-------- --------
Same IBX EBITDA growth $9,005 $9,680
======== ========
Same IBX revenues - current period $99,739 $73,733
Less same IBX revenues - prior period (83,923) (63,700)
-------- --------
Same IBX revenue growth $15,816 $10,033
======= ========
Same IBX EBITDA flow-through rate 57% 96%
======== ========
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Assets June 30, December 31,
2005 2004
------------ --------------
(unaudited)
Cash, cash equivalents and investments $132,029 $108,092
Accounts receivable, net 15,720 11,919
Property and equipment, net 345,117 343,361
Goodwill and other intangible assets, net 21,589 22,253
Debt issuance costs, net 2,473 3,164
Prepaid expenses 3,552 3,603
Deposits 3,515 6,062
Other assets 2,990 3,344
------------ --------------
Total assets $526,985 $501,798
============ ==============
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $21,068 $18,116
Accrued restructuring charges 14,227 14,750
Accrued property and equipment 5,424 2,912
Accrued interest payable 857 1,706
Capital lease obligation 34,881 35,204
Other debt facility 15,023 -
Convertible secured notes 1,950 35,824
Convertible subordinated debentures 86,250 86,250
Deferred rent 24,014 22,915
Deferred installation revenue 7,219 3,745
Customer deposits 801 3,360
Other liabilities 4,171 3,310
------------ --------------
Total liabilities 215,885 228,092
------------ --------------
Preferred stock 2 2
Common stock 24 19
Additional paid-in capital 832,922 776,123
Deferred stock-based compensation (9,295) (260)
Accumulated other comprehensive income 1,107 2,257
Accumulated deficit (513,660) (504,435)
------------ --------------
Total stockholders' equity 311,100 273,706
------------ --------------
Total liabilities and stockholders'
equity $526,985 $501,798
============ ==============
- -------------------------------------------------------
Ending headcount by geographic region is as
follows:
U.S. headcount 345 315
Asia-pacific headcount 164 153
------------ --------------
Total headcount 509 468
============ ==============
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
(in thousands)
Six Months Ended
-------------------
June 30, June 30,
2005 2004
--------- ---------
(unaudited)
Cash flows from operating activities:
Net loss $(9,225) $(39,347)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation, amortization and accretion 31,460 29,332
Amortization of stock-based compensation 4,933 860
Non-cash interest expense 1,173 4,351
Loss on debt extinguishment and conversion - 16,211
Other reconciling items 1,050 2,919
Changes in operating assets and
liabilities:
Accounts receivable (3,748) (2,368)
Accounts payable and accrued expenses 2,952 1,013
Accrued restructuring charges (968) (466)
Accrued interest payable - 503
Other assets and liabilities 5,915 2,365
--------- ---------
Net cash provided by operating
activities 33,542 15,373
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (15,413) (9,162)
Accrued property and equipment 2,512 (1,532)
--------- ---------
Net cash used in investing
activities (12,901) (10,694)
--------- ---------
Cash flows from financing activities:
Proceeds from warrants, stock options and
employee stock purchase plans 7,632 2,590
Proceeds from convertible subordinated
debentures - 86,250
Repayment of capital lease obligations (322) (201)
Repayment of other debt facilities (3,690) (3,326)
Repayment of credit facility - (34,281)
Repayment of senior notes - (30,475)
Debt issuance and extinguishment costs - (5,727)
--------- ---------
Net cash provided by financing
activities 3,620 14,830
--------- ---------
Effect of foreign currency exchange rates on cash
and cash equivalents (324) (81)
--------- ---------
Net increase in cash, cash equivalents and
investments 23,937 19,428
Cash, cash equivalents and investments at
beginning of period 108,092 72,971
--------- ---------
Cash, cash equivalents and investments at end of
period $132,029 $92,399
========= =========
Free cash flow (2) $20,641 $4,679
========= =========
- --------------------------------------------------
(1) The cash flow statements presented herein combine our
short-term and long-term investments with our cash and cash
equivalents in an effort to present our total unrestricted
cash and equivalent balances. In our quarterly filings with the
SEC on Forms 10-Q and 10-K, the purchase, sale and maturities of
our short-term and long-term investments will be presented as
activities within the investing activities portion of the cash
flow statements.
(2) We define free cash flow as net cash provided by operating
activities plus net cash used in investing activities
(excluding the purchase, sale and maturities of short-term and
long-term investments) as presented below:
Net cash provided by operating activities as
presented above $33,542 $15,373
Net cash used in investing activities as
presented above (12,901) (10,694)
--------- ---------
Free cash flow $20,641 $4,679
========= =========
CONTACT: Equinix, Inc.
Jason Starr, 650-513-7402 (Investor Relations)
jstarr@equinix.com
or
K/F Communications, Inc.
Dave Fonkalsrud, 415-255-6506 (Media)
dave@kfcomm.com